Which of the following statements is true of a capital budgeting project with a negative net present value (NPV)?
A. The project's internal rate of return is also negative.
B. The project's discounted payback period is greater than its economic life.
C. A firm should invest in a project with a negative NPV if the initial investment outlay is low.
D. The project's traditional payback period is greater than the firm's expected payback period.
E. The project's internal rate of return is higher than the discount rate used for NPV analysis.
Answer: B
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Richard wants to prove that he is diligent and reliable. What is the best advice you can give him?
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